An arrangement in which the sellers of a business may receive additional future payments for the business based on the economic performance of the sold business (or the buyer, including the sold business) after the sale.
An element of the price paid for the business which is due for payment at some time after completion of the transaction where in addition to the payment being tied to a performance measure the continued involvement of the sellers is a central feature. Earn out structures are extremely common in "people businesses" where a great deal of the value of a business is tied up with the people working in it.
a payment to the vendor of a portion of the purchase price over a period of time based on some benchmark to be achieved by the businesses
A form of deferred payment in which the payment is contingent upon certain criteria, for example future sales and/or profits, being met.
The contract between the entrepreneur and t he buying corporation that provides for the entrepreneurs to earn additional money on the sale of his company, if operating earnings are in excess of a specified amount during the future years
The portion of the purchase price that is contingent on future performance of the business. It is payable to the sellers after certain predefined levels of sales or income are achieved in the year(s) after acquisition.
A provision sometimes written into the terms of a transaction that states the vendors will receive further payments if the business they have sold achieves specified performance levels.
Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. Source